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Brokerages charging into social media

Social media getting respect among independent B-Ds and wirehouses as legitimate and even necessary

Social media is finally getting respect among independent broker-dealers and wirehouses as a legitimate and even necessary part of the marketing and business development landscape.

That already had been the case for many registered investment advisers, who have grown familiar with social media at a faster rate than those in the brokerage industry. This is largely due to the greater freedom afforded RIAs in exploiting the technology medium, thanks to less stringent regulation on the part of the Securities and Exchange Commission.

The Financial Industry Regulatory Authority Inc. has been more restrictive from the beginning — or that is the general interpretation that the brokerage industry and its compliance community have shared for years.

Although there now is a sense of slightly more freedom across the brokerage industry in the use of the medium, and in embracing it more for the purposes of marketing, brokerage firms chafe at the additional expenses incurred in meeting their compliance burden. That expense is due to the need for additional technology to help manage the burden and keep an eye on what representatives are up to on social networks.

One school of thought and one category of technology have addressed these needs in the form of archiving solutions.

More than a half dozen firms provide this type of solution, such as Erado, Global Relay, RegEd, Arkovi, Smarsh and SunGard's Protegent.

New school of thought

In the past three years, a second school of thought has emerged, suggesting that what is really needed are tools and platforms that allow a financial firm not only to retain and archive all its social-media content but also to integrate social-media selling, marketing and analytics tools.

These tools can allow a firm to keep watch over creation of social-media messaging, review it and measure the success of the content.

A handful of companies have come to the rescue to meet that need, most notably Actiance Inc., Hearsay Social Inc. and Socialware Inc. Soon to arrive will be a new platform from RegEd Inc.

Fairly big news in this category came weeks ago with Raymond James Financial Inc. saying that it is switching social-media platforms from the Socialite system from Actiance to that of Hearsay Social, largely because of the latter firm's strong Social Signals module.

In a recent interview, Raymond James chief marketing officer Mike White said that the Hearsay platform's ability to work on mobile devices and the non-work computers of its financial advisers was an additional benefit that the firm had sought.

Also, a particular strength of the Social Signals system is that it can assist Raymond James in monitoring the lives of its clients through social-network analysis.

“All our clients have tablets and are using social-media tools on them,” Mr. White said.

“The pattern of adoption in years past was far slower,” he said. “Now you see grandparents adopting the social networks within a year of their children and grandchildren.”

Steve Garrity, chief technology officer of Hearsay Social, declined to comment specifically on his firm's engagement with Raymond James but did say that many of his firm's newest customers are companies trying to get beyond meeting regulatory requirements.

“Compliance is incredibly important, but that is not why these firms are in the business they are in,” he said. “They are in the business to make money, and a solution that only solves for the compliance issues is like having a car with brakes but no engine — the car is not going to go anywhere.”

Mr. Garrity provided an easy example to visualize.

In Hearsay's “activity view,” an adviser can see all the activity summarized among his or her connections on their social networks. Based on rules that a broker-dealer or adviser can customize, “machine-learning” features of the platform are always operating behind the scenes and will note and prioritize the events that are most important for the adviser's clients and prospects.

Perhaps the simplest such event for an adviser to note might be a job change, which can make for a timely contact to the prospect or client in advance of the annual review.

Broad adoption

Of course, Raymond James isn't the only firm hard at work on the social-media front. One of the first big brokerage firms to venture into social media was Morgan Stanley Wealth Management LLC, when it began testing use of LinkedIn and Twitter by a select group of 600 advisers in May 2011 and expanded that policy to cover its entire adviser base of roughly 17,000 in mid-2012.

Many firms' initial experiments into the new medium have been cautious — allowing only pre-written, preapproved posts, for example — but as compliance requirements have evolved, so have strategies at IBDs and wirehouses.

Joe Corriero, head of digital marketing for Bank of America's Global Wealth and Investment Management division (which incorporates Merrill Lynch and U.S. Trust), said that his firm has a multipronged approach when it comes to social media.

“We look at social media as both a channel and a valuable tool from the marketing perspective,” he said. “We use it to communicate with our clients and prospective clients, but we also interact with influencers and the media using it.”

The firm has several important Twitter handles, with @MerrillLynch having the biggest presence with 60,000 followers, Mr. Corriero said.

The firm also has a corporate page on LinkedIn with about 100,000 followers, as well as a YouTube channel and a magazine on Flipboard.

“Listening, too, is very important,” Mr. Corriero said.

A big part of the firm's efforts in the social-media realm involve absorbing what clients and followers of the firm share on social-media sites, and using that data to drive its research and publishing efforts, he said.

“We note the fears and desires among our customers, and try to roll that back into what we provide them,” Mr. Corriero said.

Although he and Scott Logan, managing director and head of business technology for global wealth and investment management at BofA, declined to discuss the particular vendors that the firm uses for social-media management, they did say it is a mixed implementation.

“Strategically, we think of functionality before rolling out [a platform or features]. We consider data analysis a core competency,” Mr. Corriero said.

“When it comes to these platforms, we tune them for the social listening,” he said.

“And anytime we are distributing content, we absolutely track everything we can on it — and more than just the click-throughs but sentiment and all the softer behavioral aspects to the data,” Mr. Corriero said.

The data also are scrutinized in real time, something the wirehouses have more of than many independent advisers.